You need to be clear about whether the disc you are booting from is a CD or DVD. CD/DVD drives use separate laser systems to read the discs. So just because a drive will read a CD doesn't mean it will read a DVD. That's also true about burning disks. If you actually verify that the computer can boot from a DVD, then you can assume your system has an active malware infection, since it seems you can't access the MS FixIt tool.

Just in case I'm wrong, you can download the Autoplay Repair Tool and run it. You will definitely need to run at least two passes of the tool, and you should reboot, not just log off after each pass. When the tool no longer finds errors, your drive should be working OK. If it keeps reporting the same errors, or new errors on every pass, then we are off to Malware Removal Land.